SIE EXAM STUDY QUESTIONS: CHAPTER 1-6
EXAMS WITH CORRECT -SOLUTIONS GRADED A+
/PRACTICE TEST
A company you own common stock in has just filed for bankruptcy. As a shareholder, you
will have the right to receive:
A. the par value of the common shares
B. new common shares in the reorganized company
C. A percentage of your original investment
D. Your proportional percentage of residual assets - -ANS☑️☑️--D. Your proportional
percentage of residual assets
A corporation may pay a dividend in which of the following ways?
A. stock
B. cash
C. stock of another company
D. all of the above - -ANS☑️☑️--D. all of the above
ABC Common Stock has declined dramatically in value over the last quarter but the
dividend it has declared for payment this quarter has remained the same. The dividend
yield on the stock has:
A. Not changed bc the board has to declare the dividend amount
B. Gone down because the yield is a stated rate
C. Gone up as the price has fallen
D. been fixed at the time of issuance - -ANS☑️☑️--C. Gone up as the price has fallen
,All qualified dividends for ordinary income earners are:
A. Taxed as ordinary income each year
B. Tax free income
C. Taxed as special interest - free income
D. Taxed as a set rate of 15% - -ANS☑️☑️--D. Taxed as a set rate of 15%
All of the following are rights of common stockholders except:
A. right to elect board of directors
B. right to vote for executive compensation
C. right to vote for a stock split
D. right to maintain their percentage of ownership in the company - -ANS☑️☑️--B. right to
vote for executive compensation
Which of the following is not true regarding American Depositary Receipts (ADRs)?
A. they are receipts of ownership of foreign shares being held abroad in a US bank
B. Each ADR represents 100 shares of foreign stock, and the ADR holder may request
delivery of the foreign shares
C. ADR holders have the right to vote and to receive dividends that the foreign corporation
declares for shareholders.
D. The foreign country may issue restrictions on the foreign ownership of stock - -
ANS☑️☑️--B. Each ADR represents 100 shares of foreign stock, and the ADR holder may
request delivery of the foreign shares
An investor buys 10% preferred stock at 110. What is their current yield?
A. 10.4%
B. 9.1%
, c. 10%
d. 9.5% - -ANS☑️☑️--B. 9.1% (10%/110)
An investor buys 100 shares of XYZ 7% convertible preferred stock which is convertible into
XYZ common stock at $20 per share. How many shares of common stock upon conversion:
A. 5
b. 400
c. 500
d. 5000 - -ANS☑️☑️--c. 500 (100/20) = 5 x 100 = 500
An investor has purchased shares of a foreign company through an ADR. Which is not true?
a. the ADR may represent one or more shares of the company's common stock
b. the dividend will be paid in USD
c. the investor may elect to exchange ADR for the underlying common shares
d. investor is subject to currency risk - -ANS☑️☑️--b. the dividend will be paid in USD
An investor owns 100 shares of XYZ 8% participating preferred stock. XYZ's common stock
pays a quarterly dividend of $0.25. How much will the investor earn each year in dividends?
a. $825
b.$90
c$180
d. $900 - -ANS☑️☑️--d. $900 (8%*100 = 8*100 = 800 + $1 *100 =900)
An investor who buys 7% cumulative preferred stock will receive semi annual dividends of
a. $7/share
b. 7% of corporate profits
EXAMS WITH CORRECT -SOLUTIONS GRADED A+
/PRACTICE TEST
A company you own common stock in has just filed for bankruptcy. As a shareholder, you
will have the right to receive:
A. the par value of the common shares
B. new common shares in the reorganized company
C. A percentage of your original investment
D. Your proportional percentage of residual assets - -ANS☑️☑️--D. Your proportional
percentage of residual assets
A corporation may pay a dividend in which of the following ways?
A. stock
B. cash
C. stock of another company
D. all of the above - -ANS☑️☑️--D. all of the above
ABC Common Stock has declined dramatically in value over the last quarter but the
dividend it has declared for payment this quarter has remained the same. The dividend
yield on the stock has:
A. Not changed bc the board has to declare the dividend amount
B. Gone down because the yield is a stated rate
C. Gone up as the price has fallen
D. been fixed at the time of issuance - -ANS☑️☑️--C. Gone up as the price has fallen
,All qualified dividends for ordinary income earners are:
A. Taxed as ordinary income each year
B. Tax free income
C. Taxed as special interest - free income
D. Taxed as a set rate of 15% - -ANS☑️☑️--D. Taxed as a set rate of 15%
All of the following are rights of common stockholders except:
A. right to elect board of directors
B. right to vote for executive compensation
C. right to vote for a stock split
D. right to maintain their percentage of ownership in the company - -ANS☑️☑️--B. right to
vote for executive compensation
Which of the following is not true regarding American Depositary Receipts (ADRs)?
A. they are receipts of ownership of foreign shares being held abroad in a US bank
B. Each ADR represents 100 shares of foreign stock, and the ADR holder may request
delivery of the foreign shares
C. ADR holders have the right to vote and to receive dividends that the foreign corporation
declares for shareholders.
D. The foreign country may issue restrictions on the foreign ownership of stock - -
ANS☑️☑️--B. Each ADR represents 100 shares of foreign stock, and the ADR holder may
request delivery of the foreign shares
An investor buys 10% preferred stock at 110. What is their current yield?
A. 10.4%
B. 9.1%
, c. 10%
d. 9.5% - -ANS☑️☑️--B. 9.1% (10%/110)
An investor buys 100 shares of XYZ 7% convertible preferred stock which is convertible into
XYZ common stock at $20 per share. How many shares of common stock upon conversion:
A. 5
b. 400
c. 500
d. 5000 - -ANS☑️☑️--c. 500 (100/20) = 5 x 100 = 500
An investor has purchased shares of a foreign company through an ADR. Which is not true?
a. the ADR may represent one or more shares of the company's common stock
b. the dividend will be paid in USD
c. the investor may elect to exchange ADR for the underlying common shares
d. investor is subject to currency risk - -ANS☑️☑️--b. the dividend will be paid in USD
An investor owns 100 shares of XYZ 8% participating preferred stock. XYZ's common stock
pays a quarterly dividend of $0.25. How much will the investor earn each year in dividends?
a. $825
b.$90
c$180
d. $900 - -ANS☑️☑️--d. $900 (8%*100 = 8*100 = 800 + $1 *100 =900)
An investor who buys 7% cumulative preferred stock will receive semi annual dividends of
a. $7/share
b. 7% of corporate profits
